McCormick chief sticks to his word

Executive: Robert J. Lawless attributes the spice company's recent success to delivering on promised quality

June 25, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

At a board of directors dinner four years ago, Charles P. "Buzz" McCormick Jr. bestowed upon his heir apparent an honorary hockey stick. Embossed on the handle, along with the McCormick & Co. logo, were the words "War," "Turnaround" and "Success."

"We were in the war, and he said we'll come out of the war and go into a turnaround phase, and that's where we'll turn the company around, and move then to the success phase," said the recipient of the stick, then-company President Robert J. Lawless. "That's the vision that Buzz McCormick had of what McCormick would go through."

Looks like he was right on the money.

Lawless, a former hockey player, has been chairman of McCormick for a little more than a year and chief executive for three. In that time, the company won a market-share war against a rival spice producer, turned around its fortunes and is enjoying record earnings, though you might not know it from the yawns on Wall Street.

"I think he's done extremely well," said Kurt Funderburg, an analyst at Ferris, Baker Watts Inc. in Baltimore. "If you look at both the operational performance and financial performance of McCormick over the past few years, you definitely can see an improvement from where things were before Bob came in."

Lawless, 53, doesn't like to acknowledge he had a lot to do with the company's achievements. Instead, he heaps praise on McCormick's work force, which is more than 2,000 strong in Maryland.

"I feel I'm just here and I'm a catalyst to make it work. I think if you asked people in the company, `What about Bob Lawless?,' I would think they'd say `Energy beyond belief, a whole focus on accountability,'" he said, bounding over to his desk to grab a small laminated card that reads "Do what you promised you would do."

"It's very simple, and it's worked, it's really, really worked," he said. "Do what you promised you would do. Accountability is really important, performance is important."

Lawless and other members of the close-knit executive team ("you could take a strong putter and hit all of us in a given day") publicly set three goals for 1999 - to increase sales 5 percent to 7 percent (sales in fact rose 6.6 percent); increase gross margin by 1 percentage point (it went up 1.2 percentage points); and raise earnings per share by 12 percent to 15 percent (excluding charges, they rose 18 percent).

During the past three years, Lawless and his staff streamlined operations - cutting 300 jobs, mainly overseas, and closing a plant in the United Kingdom. They also reorganized the top echelon of the company and eliminated Lawless' former position of chief operating officer.

They aggressively fought for grocer contracts, beating back the threat from Burns Philp, an Australian company that makes the Spice Island and Durkee brands. (The Federal Trade Commission feared McCormick might have been too aggressive and conducted a three-year investigation into anti-competitive behavior. The case was settled this year, with McCormick paying no monetary damages but agreeing to give the FTC regular access to its contracts for the next five years.)

Lawless also put a stronger emphasis on products designed for people who want to cook at home but don't have time to create everything from scratch. He re-launched the dry seasoning mixes - packets that contain spice blends for foods such as pasta and beef - and instituted the Meal Idea Center, a color-coded display highlighting the packets.

Lawless also boosted the company's advertising budget - nearly nonexistent several years ago - to the $30 million range.

"A lot of little things are being done better that have added up to extraordinarily strong earnings growth," said Mitchell B. Pinheiro, an analyst at Janney Montgomery Scott LLC.

Even so, many say it's time for Lawless to move into a higher gear.

"What Bob hasn't demonstrated yet is aggressiveness," Pinheiro said. "We haven't had any acquisitions, we haven't seen any bold initiatives or new product initiatives that would bring the McCormick brand outside of the spice and seasonings area."

Though the company hasn't made a major purchase in the past five years, Lawless said McCormick does have an "active" acquisition program.

"We have people that we're interested in," he said. "All I can say is when they become for sale, we will participate. The key component in that is that we will participate, but we want to preserve shareholder value. ... We're not going to overpay."

Just late last week McCormick said it was in the "well-advanced" stages of negotiating to buy Ducros, a French spice and seasoning maker that had net sales in 1999 of nearly $250 million. Analysts said it would be a good fit for McCormick but reserved final judgement because the acquisition price is still unknown.

It's a good bet Lawless will go after target companies with everything he has.

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